Halyard Health Accelerates Transformation Into Medtech Player

By Jof Enriquez,
Follow me on Twitter @jofenriq

Halyard Health has announced 2016 full-year net sales of $1.6 billion as it continues to strengthen its medical device business more than two years after it separated as a standalone entity from Kimberly-Clark Corp.

The spin-off, completed in October 2014, allowed Halyard to focus on higher-margin medical devices and surgical and infection-prevention (S&IP) products. The company made its first acquisition in April last year when it paid $174 million for CORPAK MedSystems, a maker of enteral, nasoenteric, gastrostomy, jejunal tubes and accessories, endoscopic devices, and paracentesis kits and trays.

Halyard’s medical device sales represented 38 percent of its total product portfolio in fourth quarter 2016, an increase from 30 percent at the time of its spin-off, according to Seeking Alpha. The company also drew 64 percent of its operating profit from medical devices, growing from 37 percent last year.

Halyard reported that 2016 fourth quarter net sales grew 2 percent to $410 million, compared to the same period last year, including CORPAK, which contributed 3 percent of growth. Volume growth in medical devices, including CORPAK, manufacturing cost savings and favorable currency exchange rates, were offset by lower selling prices in S&IP and higher selling, general, and administrative expenses, the company said.

Full-year 2016 net sales rose 1 percent to $1.6 billion, while net income for 2016 was $40 million, compared to a net loss of $426 million in 2015. For 2017, the company expects net sales, on a constant currency basis, to be even, but could be up 2 percent, compared to 2016. Medical device net sales also are projected to grow 7 to 9 percent next year, on a constant currency basis, including approximately 3 percent growth attributed to the CORPAK acquisition.

"Last year we met our financial goals, completed our first acquisition and took strategic steps to advance the company's transformation into a leading Medical Devices company. Progress of our transformation is evident from the increasing shift in our portfolio to Medical Devices, which generated the majority of our operating profit," said Robert Abernathy, Halyard chairman and CEO. "In 2017, we will remain focused on delivering our plan and using our strong financial position to invest in growth opportunities. I am confident in our strategy and in our team's ability to execute."

This year, Halyard is investing between $40 to $45 million for R&D, and plans to launch more than a dozen new products to accelerate its medical devices business growth, and to stabilize the performance of its segment-leading S&IP division. The company says it is looking at potential M&A deals to augment company-led innovation and help build out its medical devices portfolio.